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When the Van Eck Emerging Markets Opportunity Fund won a $62.5 million federal judgment against Nicaragua last April for defaulting on its foreign debt payments several years ago, the chance of collecting from that impoverished country looked to be slim to none. But today, in an international twist, the fund is moving aggressively in U.S. District Court in Miami to recover those millions — not from Nicaragua, but from a subsidiary of a Swedish telecommunications giant that until a few weeks ago had a regional office in Miami. Using a legal tool more often associated with dunning deadbeat dads, lawyers for the Van Eck fund on Jan. 10 slapped a court-approved writ of garnishment on Swedtel Inc.’s corporate offices in Miami. Three weeks later, on Jan. 31, Swedtel closed its Miami office, according to Van Eck fund attorney Chris Todd, of Washington, D.C.’s Kellogg Huber Hansen Todd & Evans. The collection tactic has been used before. In their high-profile lawsuit against the Cuban government, Cuban-American relatives of the Brothers to the Rescue aviators who were shot down by Cuban jets also used garnishment several years ago to go after money owed to Cuba by AT&T. Like Cuba, Nicaragua has refused to pay the federal judgment. So Van Eck, which is based in New York, has been looking for other ways to collect on its demand for $67 million, which includes post-judgment interest accruing at a rate of about $15,400 per day. Swedtel became a target of opportunity last August when Telia AB Swedtel, as lead investor in an international consortium, agreed to pay $83 million for 40 percent of Nicaragua’s state-owned telephone system. Telia AB, the biggest phone company of the Scandinavian and Baltic region, is a principal owner of Swedtel. What Van Eck wants, Todd said, is the $50 million Swedtel still owes Nicaragua in installment payments over the next five years. “They certainly haven’t done anything wrong. They’re just in the position of owing money to Nicaragua, and the law places certain obligations on them under those circumstances,” said Todd. At the same time, Van Eck is on the prowl for other ways to collect. “There may be other entities that owe the government of Nicaragua money,” said Van Eck’s local counsel, Isaac J. Mitrani of Miami’s Mitrani Rynor Adamsky & Macaulay. Even as Swedtel was shutting its doors in Miami, a lawyer representing the company filed papers in court Jan. 31 opposing Van Eck’s garnishment. Attorney Martin J. Shuham of the Fort Lauderdale, Fla., office of Holland & Knight told U.S. District Judge Ursula Ungaro-Benages of the Southern District of Florida that Swedtel doesn’t have any money or property that’s owed to Nicaragua. The court papers do not elaborate. Shuham referred questions to another firm attorney, Connie Barnhart, who did not return three telephone calls to her office. No hearing has been set to iron things out. Todd, Van Eck’s lawyer, said that if Swedtel’s abrupt departure from Miami was a ploy to escape garnishment, it won’t work. “They’re still incorporated in Florida and the directors of Swedtel, the Florida corporation, are all employees of Swedtel AB,” said Todd. “They’re still on the hook.” Swedtel, the global consulting and engineering subsidiary of Telia AB, has been developing a communications network from Europe to Asia and Africa and the United States and Latin America. In 1997, two years after incorporating in Florida, Swedtel announced plans to use Miami as its gateway to the south. The consortium of Swedtel and the Honduran power company EMCE was the only bidder last Aug. 31 when the government of former President Arnoldo Aleman Lacayo auctioned off the 40 percent stake in Empresa Nicaraguense de Telecomunicaciones (ENITEL). Two pre-qualified bidders, France Telecom and Mexico’s America Movil, chose not to participate. Another interested party identified in international news accounts as seeking, but not receiving, a piece of the telephone deal: Ricardo Mas Canosa, brother of the late founder of the Cuban American National Foundation, Jorge Mas Canosa. The Financial Times of London, Latin American Regional Reports and others have reported that Nicaragua was under pressure from the International Monetary Fund and the World Bank to divest ENITEL. Privatization is a key condition for obtaining debt relief under the World Bank’s Highly-Indebted Poor Countries (HIPC) initiative. The deal, which includes an option to buy an additional 25 percent of ENITEL, was instantly controversial when it was announced. A week before, a Nicaraguan judge approved an injunction barring the sale after the municipal government of Managua claimed it was owed nearly $30 million in back taxes by ENITEL. The Financial Times on Sept. 4 reported the auction took place in secret after journalists had been told the auction had been postponed. The story also quoted an economic analyst who said the consortium “paid much less than the bench price for the shares” of ENITEL. The analyst did not estimate the true value, but Managua Mayor Herty Lewites told reporters it could be as high as $450 million. According to news reports, Swedtel has promised to invest up to $500 million over the next decade to develop Nicaragua’s backward telephone system. Nicaragua’s troubles with Van Eck, whose emerging markets fund is a $150 million investment partnership of institutions and wealthy individuals, can be traced to a 1997 lawsuit filed by Van Eck and other creditors in federal court in Manhattan. A year before, Van Eck purchased as an investment $13 million of debt Nicaragua previously had defaulted on. A settlement was reached in 1998, but Van Eck sued again in 2000, claiming Nicaragua had failed to pay as agreed. Last year, in a summary judgment, U.S. District Judge William H. Pauley III of the Southern District of New York awarded the $62.5 million to Van Eck. Isaac J. Mitrani is local counsel for Van Eck, which has garnished the $50 million Swedtel owes Nicaragua.

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